Categories: Business

How to Obtain Capital for a New Business

I’m starting a new business with a friend, and we need about $5,000 to get started. We believe that after the initial funding, we will be able to continue without any more cash infusions and that we will be able to rely on sponsors and advertising after that.

But how do we get that initial $5,000? We don’t mind putting in some money, but $2,500 each is a little more than we were hoping for. So what options do we have for getting that initial funding?

We didn’t want to go to family and as for money. We believe in our product and because of that, we should be able to convince non-partisan parties to invest with us. When you go to friends and family, you risk causing uncomfortable situations later. This should only be a last resort, and we decided against it.

One creative option for us is to use a site like Kickstarter, which is a funding platform designed to help fund creative projects. There are several of them out there, and instead of having people invest in your business, people fund projects they believe in and the project owners give out perks for certain contribution levels. So you could give away a t-shirt to each person who invests $25, but all the money is the project owner’s to keep and never has to be returned.

It’s a risk-free way to get money for a project. The only downside is that you are releasing your idea to the general public and there’s no way to ensure that nobody will steal it. I think it’s a fairly small risk (especially since we are nearly done with building the site) and the benefits outweigh that risk.

As I wrote this article, I got a phone call from my investment partner friend who I floated the idea to a few weeks ago who would help us with some aspects of the business and also be an investor. We’ve been over the idea, showed him our site mockups, and explained in detail how the business would work, what role he would have, and the terms of the investment.

Looks like we are $3,000 closer to our goal, just $2,000 to go!

Readers, do you think we should fund it ourselves and assume the risk or go with Kickstarter to get the rest funded?

Sweating the Big Stuff

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